If your Singapore company uses a nominee director to meet the local director requirement, Raffles Corporate Services asks you to appoint at least two directors of your own, so that the board has three directors in total. The reason is practical. With only one director of your own plus the nominee, the company cannot hold a valid board meeting, pass a written directors’ resolution or sign its annual directors’ statement unless the nominee takes part. With two of your own, the company’s routine decisions and annual filings do not depend on the nominee being available or willing to sign.
Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.
What the nominee director is there for
Section 145(1) of the Companies Act 1967 requires every Singapore company to have at least one director who is ordinarily resident in Singapore. Founders who live overseas, or who have not yet relocated, usually meet this requirement through a nominee director service.
A nominee director is still a full director in law. They owe the same duties as any other director and can be personally liable for breaches. They are not there to run your business, sign your commercial contracts or operate your bank account. Because they carry that personal risk without day-to-day control, a nominee will normally sign only what they can properly verify. Our guide to nominee director legal requirements and risks explains this in more detail.
That is exactly why the size of the board matters. If the company cannot act without the nominee’s signature, every delay, query or disagreement involving the nominee stops the company.
Problem 1: board decisions with only two directors
Most Singapore private companies adopt ACRA’s model constitution, or a constitution based on it. Under the model constitution for a private company limited by shares (Companies (Model Constitutions) Regulations 2015):
- Quorum: the quorum for a directors’ meeting is 2, unless the directors fix another number (regulation 86).
- Voting at meetings: questions are decided by a majority of votes, and the chairman has a casting vote if the votes are equal (regulation 84).
- Written resolutions: a directors’ resolution in writing must be signed by all the directors entitled to receive notice of a directors’ meeting (regulation 93).
Now apply those rules to a board of two: one founder and one nominee.
- A written resolution needs both signatures. If the nominee is travelling, unwell, asks for supporting documents or declines to sign, the directors’ resolution in writing cannot be passed.
- A meeting needs both directors present. With a quorum of 2, the founder alone cannot hold a valid board meeting. If the nominee does not attend, there is no quorum and no decision.
- A split vote depends on the chairman. If both attend and disagree, the vote is 1 to 1. The chairman’s casting vote can break the tie, but only at a meeting the nominee has attended, and relying on a casting vote against your own resident director is not a stable way to run a company.
How a board of three solves it
With two founder-side directors and one nominee:
- Your two directors form a quorum on their own, so a validly convened board meeting can proceed even if the nominee does not attend.
- Two votes out of three is a majority, so the board can decide routine matters even if the nominee abstains or votes differently.
- Two directors are available to sign the annual directors’ statement (see below) without the nominee.
Two points need care. First, the nominee is still a director and must be given proper notice of every board meeting and a fair chance to take part. A board of three is about keeping the company working, not about leaving the nominee out. Second, under the model constitution a written resolution still needs every director’s signature, including the nominee’s. If you want the board to act by written resolution without the nominee’s signature, the constitution must allow written resolutions signed by a majority of directors. That is a change made by special resolution of the shareholders and lodged with ACRA; see our guide on amending your company’s constitution. Our article on circular resolutions versus board meetings compares the two routes.
Problem 2: the directors’ statement needs two signatures
Every year the financial statements laid before the company must be accompanied by a directors’ statement. Section 201(16) of the Companies Act requires this statement to be signed on behalf of the directors by 2 directors of the company.
The directors’ statement is not a formality. Under the Twelfth Schedule to the Act, the directors state their opinion on whether the financial statements give a true and fair view, and whether, at the date of the statement, there are reasonable grounds to believe the company will be able to pay its debts as and when they fall due. See our guide to section 201, financial statements and the directors’ statement.
On a board of one founder and one nominee, the nominee has to be one of the two signatories. A nominee who does not manage the business can only give that opinion if they receive complete accounts, bank statements and explanations in time. If the records are late or incomplete, the nominee may reasonably refuse to sign. The financial statements then cannot be finalised, which can delay the AGM, the annual return and the company’s tax filing.
With two founder-side directors, the people who actually run the business sign the directors’ statement, and the annual cycle no longer depends on the nominee.
Two directors compared with three
| Situation | 1 founder + nominee | 2 founders + nominee |
|---|---|---|
| Quorum for a board meeting (model constitution: 2) | Needs the nominee to attend | Met by the two founders |
| Board decision by majority at a meeting | 1 to 1 if the nominee disagrees | 2 to 1 without the nominee |
| Written directors’ resolution (model constitution: all directors sign) | Needs the nominee’s signature | Still needs the nominee’s signature unless the constitution allows majority signing |
| Directors’ statement (s201(16): 2 directors sign) | Nominee must sign | The two founders can sign |
Who can be your two directors?
Under section 145(2), a director must be a natural person aged at least 18 and of full legal capacity. Your own directors do not need to live in Singapore, because the nominee meets the resident director requirement. They must not be disqualified or bankrupt, and they take on the same duties and potential liability as any other director, so appoint people who will actually engage with the company’s affairs. Our guide to appointing company directors in Singapore covers eligibility and the ACRA filing.
Being a director of a Singapore company does not give anyone the right to work in Singapore. If a founder intends to relocate and work in the business, they need a suitable work pass, commonly an Employment Pass, applied for separately. See our Employment Pass guide.
When the nominee is no longer needed
Once one of your own directors becomes ordinarily resident in Singapore, for example after relocating on an Employment Pass, the company may no longer need a nominee director. The nominee cannot simply step down first: section 145(5) prevents a director from resigning if that would leave the company without a director ordinarily resident in Singapore. The resident replacement must be appointed before the nominee resigns. Our article on planning the board handover when a founder’s EP is approved explains the sequence.
Frequently asked questions
Is a board of three a legal requirement?
No. The Companies Act requires only one director ordinarily resident in Singapore. A board of three is how we make a nominee arrangement workable, because it lets the company hold board meetings and sign its directors’ statement without depending on the nominee.
Can we keep two directors and just ask the nominee to sign everything?
A nominee director will not sign documents they cannot verify, and they should not. A two-director board means every written resolution and every directors’ statement waits for the nominee, which often causes delays at year end.
Does a board of three let us exclude the nominee?
No. The nominee must still receive notice of board meetings and the board papers, and has the same right as any director to take part and to see the company’s records.
Our constitution is not the model constitution. Does this still apply?
The directors’ statement rule in section 201(16) applies to every company. Quorum and written resolution rules depend on your constitution, so check its wording. We can review it as part of setting up the nominee arrangement.
Setting up a nominee director arrangement that works
If you are incorporating a Singapore company from overseas, or already use a nominee director and want to restructure your board, we can review your constitution, appoint the additional directors and file the changes with ACRA. Email [email protected] or WhatsApp +65 8501 7133. Tell us how many directors the company has now and where each of them lives.
For related company questions, see our corporate secretarial guides.
Willie Tan, Raffles Corporate Services